5 Signs of a Good Financing

Investors should generally dislike companies that issue stock because it’s better if they are self-financing and don’t need to dilute their shareholder base.

However, companies do need to grow, and financing is one of the prime reasons the stock market exists in the first place. Rather than dismiss all financings, here are five points to consider in determining whether one is good or bad.

1. A new share issue should be priced higher than the prior one

This seems so basic, but stocks are supposed to go up. When a company issues stock at a lower price than its previous issues, it just makes us … mad. Read More…

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Replies to this Post

Nolansays:

I still find it amazing that most new investors don’t take the time to read prospectuses and do their homework. Learning to invest is not a game when your earnings are at risk.

Sure people want to earn a good return based on others you trust (neighbors, friends) but if you don’t research you are always bound to lose in the end.

Moises Csays:

New distributions is quite common and in my day i too have seen some stinkers where they would offload at lower prices than preivous allocations. shutter.

Lonisays:

Lol i thought this post was going tobe about financing a new home (mortgage).

Regan Sleethsays:

I remember the days of dot com boom and every day there was a new IPO offering and people would be like dogs trying to get in on it since every IPO at the time would post record values on the first week. Everyone got rich in the 90s.

Kamisays:

It’s all about the management team. Too many companies are run very lousy and you can see where things are heading by looking at the heads of a firm. When i was young i wouldn’t do much looking into members and instead just looked at numbers and even charts.

Boy was i wrong. There is a lot to be said when you look at the people behind a company.